Tax on Share Sales

Jamsmyth

Hey! I am a shareholder in a company and I am being bought out. Will I only have to pay a total of 20% tax on the money I make from this transaction? Have spoken to my accountant but like to get double confirmation. Thanks.

PaulCooper

You need to provide a bit more info to get a meaningful answer
Do you own more than 5% of the company
How long have you owned the shares
Are you a director of the company
What was the purchase price & what is the sale price of the shares

It's not income tax that you'll need to consider, it's Capital Gains Tax & there are some real good tax people on here that will provide a good answer, with the above info
Good luck
Paul 

Jamsmyth

Hi Paul, Yes I own more thank 5% of the company. The company has only been around for 12 months. I got my shares in February. I am not listed as a director. I paid a nominal amount for the shares. The sale price is £160,000.

I appreciate any additional advice you guys can give me!

Regards

Jeremy535897

Capital gains tax on gains unconnected with residential property are charged at a maximum of 20%, depending on your income. You have to have held the shares for 2 years to benefit from business asset disposal relief (which reduces the rate to 10%).

Income tax may be charged in certain circumstances if the the shares were acquired by reason of employment.

Jamsmyth

Thanks Jeremy I appreciate that.

PaulCooper

I'm sure your accountant will advise you on this, but if you're married you can transfer some of the shares to your wife hence giving you another lump of CGT relief 
Paul

Jeremy535897

PaulCooper said:

I'm sure your accountant will advise you on this, but if you're married you can transfer some of the shares to your wife hence giving you another lump of CGT relief 
Paul

Not necessarily straightforward for private company shares.

Jamsmyth

Just a follow up. Is there a length of time the company has to have been set up and running for me to be able to take the shares at the 20% level? In this situation the company has only just finished its first year of trading. Would that preclude me from having my shares purchased at the 20% level?

Thanks!

Jeremy535897

You cannot pay more than 20% capital gains tax, unless the capital gain is on or in relation to a gain on residential property.

Dead_keen

Jamsmyth said:

Would that preclude me from having my shares purchased at the 20% level?

Just checking it is not the company buying back its own shares from you?

Jamsmyth

Dead_keen said:

Jamsmyth said:

Would that preclude me from having my shares purchased at the 20% level?

Just checking it is not the company buying back its own shares from you?

Yeah it is the company buying back its own shares? I assume that changes the scenario?